The Growth of hedge funds: The reasons for a sustained progress and its effects on the UK investments market - Essay Example

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The interests of the hedge funds are not sold in a registered public offering. Additionally, they are not registered under the Investment Company Act…
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The Growth of hedge funds: The reasons for a sustained progress and its effects on the UK investments market
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Download file to see previous pages They are beneficial to the financial markets because they enhance liquidity and ensure that there is market efficiency. Thus, the essay discusses the reasons for a sustained progress and its effect on the UK’s investment market.
Recently, hedge funds have become investment vehicles. There are different aspects of the hedge funds which include potential and existing investors, investment portfolio, regulatory framework, different strategies which are adopted and the return profiles of the funds in relation to the assets which are available (Gregorious 2003, p. 51). In the UK, the hedge funds were used to compound the crisis. They were used most of the time because they are free from the regulatory restrictions, which are faced by most of the other investment vehicles in the country.
Consequently, hedge funds have become popular among the investors because they bring about a systematic financial system. Additionally, hedge funds are an integral part in the development of the financial activities and financial market all over the world. Hedge funds play a big role in the United Kingdom because of the global business hub and the presence of the free market mechanism. In addition, the presence of the plethora of products and services in United Kingdom opens up an avenue for the use of the hedge funds (Gregorious 2003, p. 21). The presence of different avenues gives the investors a chance to invest in diversified or specific assets. The assets range from foreign exchange to real sector assets such as real estates, infrastructure, and manufacturing. They can also be financial assets such as commodities, stocks, and bonds.
Through the hedge funds, investors are exposed to a wide range of trading activities and assets. Regulators permit the hedge funds to be exposed to risks that other investment funds are not allowed to take. Notably, the hedge funds are strategically oriented. The strategy may involve taking an exposure to arbitrage opportunities, the ...Download file to see next pagesRead More
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